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Economic uncertainties trigger mixed property market sentiments: NUS

By Hailey Yu

/ EdgeProp Singapore |

July 25, 2022 2:12 PM SGT

The Real Estate Current Sentiment Index improved from 5.9 to 6.1 while Future Sentiment Index declined from 6.3 to 5.3 in the second quarter

SINGAPORE (EDGEPROP) - The Singapore real estate market saw mixed sentiments in the second quarter, according to quarterly findings of the Real Estate Sentiment Index (Resi) published by National University of Singapore Real Estate (NUS+RE).

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Resi comprises a Current Sentiment Index and a Future Sentiment Index, tracking changes in sentiments for the past and the next six months respectively, and a Composite Sentiment Index, which is the derived indicator for the current overall market sentiment.

In the second quarter, the Current Sentiment Index improved from 5.9 to 6.1 while Future Sentiment Index declined from 6.3 to 5.3. The Composite Sentiment Index declined from 6.1 to 5.7, likely triggered by rising global economic uncertainty, according to the report.

“Though respondents remain relatively optimistic about the current market outlook, they are more cautious about the market outlook for the next six months to a year ahead,” says Professor Sing Tien Foo, head of the department of real estate at NUS.

Resi uses a “net balance percentage” approach to reflect market sentiment, with a positive net balance indicating optimism and a negative net balance showing the opposite.

All real estate sectors maintained a positive current net balance in the second quarter. The hotel/serviced apartment sector, improving to 90%, posted the highest current net balance in the second quarter. It was followed by the office sector and the industrial/logistics sector at 57% and 53% respectively. The prime residential sector saw strongest growth, rebounding to 33% in the second quarter, up from -8% previously.

Looking ahead, all real estate sectors recorded positive net future balances in the second quarter, although at a lower level as compared to the previous quarter. The hotel/services segment once again posted the highest future net balance, followed by the office and industrial/logistics segments at +80%, +43% and +27% respectively.

The second-quarter survey results found that 97% of respondents listed rising inflation and interest rates as top risk to adversely affect property market sentiments over the next six months. The second potential risk is a decline in the global economy, indicated by 84% of respondents. Potential risks regarding job losses and decline in the local economy jumped to 36.7%, up 12.8% from the previous quarter. Adverse risks concerning tight liquidity in the debt market and real estate price bubble both saw increases in the second quarter as well.

On the other hand, concerns over construction costs softened, although it remained the top four potential risks.

In the second quarter, 44% of the developers surveyed expected moderately more units to be launched in the next six months. About 12.5% of developers expected a moderately or substantially fewer number of units to be launched over the next six months. Of the developers, 63% expected new residential launches to be priced moderately or substantially higher in the next six months, and 31% expected prices of new launches to remain the same, while 6.3% expected prices to be substantially lower.

Labour costs and building material costs remained a top concern for developers.

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